Friday, June 13, 2014

An Open Letter To Prime Minister

PM Modi, time for bold reforms-By Arvind Panagariya-Times of India-13th June 2014

Dear Prime Minister,

Your decisive victory in the recent election has lifted the morale of Indians around the world as no past event in my entire life. We go around looking happy, our faces gleaming with optimism and our heads held high. Even the crucial 1977 election, which brought much needed relief, did not bring hope as this one has.

When pundits argued that the era of majority governments was over for good in India, you thought outside the box and dared people to give you a clear mandate to change their lives for the better. People responded and delivered what pundits had uniformly predicted was impossible. They gave your party an absolute majority in the Lok Sabha and National Democratic Alliance (NDA) the same in both Houses of Parliament combined.

It is now your turn to deliver. You have made an admirable beginning, beating by a long shot the expectations of many who had constantly downplayed your sincerity and underestimated your resolve and ability to work hard. You have dramatically improved governance at the Centre even within the short period that you have been in office. Your ministers and bureaucrats are working long hours, six days a week. Transparency has risen with no signs that bribes are being taken to swiftly clear large projects.

But alas, while vision and governance for which you are an icon today are indispensable, without an appropriate policy framework they will not deliver what 125 crore Indians now expect from you. In this context, the recent presidential address to the joint session of Parliament falls short: it is largely silent on policy reforms.

To deliver on your promise, you must once again think outside the box. Pundits tell us that the central government cannot make major changes to existing labour and land legislations. I too have fallen prey to this thinking and therefore sought stealthy avenues to land and labour market reforms, through delegation of authority to states and tweaking of rules and regulations. Rajasthan's dynamic new chief minister has even taken the lead by initiating a set of reforms to the Factories Act of 1948, Industrial Disputes Act of 1947 and Contract Labour Act of 1971.

Yet, this road of one reform in one state at a time is too long to take us to the destination in time. It is bound to shortchange the aspirations and yearnings of the young who do not wish to wait as long as their parents did for even marginal improvements to their lives.

Why should you favour a cautious rather than bold approach to policy when people have unhesitatingly placed their fate in your hands? They have given you a clear mandate to make the changes necessary to achieve the goals you set out during your campaign.

You have created a huge momentum for change by infusing a level of energy and dynamism at all levels of government that existed earlier only in the immediate post-Independence era. By all accounts, your ministers, bureaucrats and the people of India are ready for change. Why then the hesitation? Why not clean up labour and land laws for all of India through central legislation? Why hold the vast majority of workers toiling in the informal sector hostage to the privileged status of a tiny elite labour force?

Indeed, if we cannot take bold steps even at this moment when the entire country stands firmly behind you, i will perhaps not see an India free of abject poverty in my lifetime. As time passes, your ministers will become entrenched with bureaucrats returning to business as usual. Please be mindful that while you have come to Delhi with Gujarati culture, most of your ministers and bureaucrats are deeply steeped in Delhi culture.

Your campaign speeches showed that you dream big when it comes to doing projects in the public sector whether it is building new cities, linking rivers, running bullet trains or providing toilets to every home in India. What you have done in Ahmedabad alone by completing the Sabarmati Waterfront, Kankaria Lake and Bus Rapid Transit System projects in record time shows that you also have what it takes to convert such dream projects into reality.

But you must think equally big about private sector "projects" in manufacturing. Think about Foxconn, a manufacturing firm in China that assembles products for international brand names such as Apple and Dell of the United States and Nintendo and Sony of Japan. Foxconn alone employs 1.3 million workers and pays its workers $3 per hour (yes, per hour, not per day). Why can India not have Foxconn 10 years from now?

Sir, i can scarcely resist ending this letter with a passage from Shakespeare's Julius Caesar, which beautifully captures the essence of this moment: "There is a tide in the affairs of men./ Which, taken at the flood, leads on to fortune;/ Omitted, all the voyage of their life/ Is bound in shallows and in miseries./ On such a full sea are we now afloat,/ And we must take the current when it serves,/ Or lose our ventures."

The writer is Professor of Indian Political Economy at Columbia University.

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